Apple – The Numbers Part II

Here are some of the reasons why Apple is under pressure. It used to be that every time Apple released a product there was a Usain Bolt advance between 1st and 2nd. You couldn’t name who was in 2nd place. They were irrelevant. If they mentioned anyone it was the spectacular Nascar crash of RIM and Nokia. Now with the release of the iPhone 5 the difference between 1st place and 2nd place is pretty blurry and when you leave a decision in the hands of the judge everything is arguable.

Apple’s cash cow, the iPhone 5, is severely under assault.
iPhone 5 = 65% of Apple’s overall profit. Gross margins: 55%

These hot numbers are under attack. Such fat margins are not sustainable. It attracts competition. And now the competition is not inferior to Apple anymore. You can have a debate that the Samsung Galaxy S3 is equal or superior. Microsoft has some credible phones and early reviews of RIM’s Blackberry 10 claims that it will be the best smartphone to hit the market. Carriers like Verizon are less likely to fork over $400 for every sale of iPhone sold.

New products like the iPad mini are more costly to produce and are not as profitable. The release of the iPad mini represents a defensive move by Apple. They used to be the leading proactive company and now they are becoming more and more reactive to the competition.

The bottom line: It’s getting harder and harder for Apple to justify that you pay over $500 for a phone. Competition will bring price down to grab market share.

Photo Credits: Ferrum College/News

Information Ring – 2012 Holiday Editions

“Everyone has always told me I’m nuts when making investment decisions, but when you can look at something differently than other people, you can find opportunity.”

– Sheldon Adelson, Billionaire Casino Operator

$6 Billion Later
It took $6 billion to find out Obama remains President, the Democrats still control the Senate and the Republicans still control the house. Senate Democrats are fortunate to take two seats from the same two Republicans who made their controversial rape comments. Richard Mourdock, one of the losers and the only senate candidate that Romney endorsed, said that if you get pregnant because of rape, it’s a gift from god. The GOP certainly didn’t win any votes with that one.

End of the World
If the world doesn’t end on December 21st as the Mayan calendar predicted, the Americans made sure that there is a back up date to get the job done: December 31st. That date, nicknamed the Fiscal Cliff, is the expiration of the Bush tax cuts, payroll deductions, break for business, shift in the alternative minimum tax, debt ceiling expiration, and a lot of other stuff that will throw the economy and the world down a cliff. According to Barron’s, over 1,000 government programs – including the defense budget and Medicare are in line for “deep, automatic cuts.” The American government made sure that this will happen because it requires Democrats and Republicans to work together. Right now Obama is answering fiscal cliff questions on Twitter.

Obama 2012-2016 Agenda
Incredible how this election was run without knowing what each candidate will do. The whole campaign was focus on trashing each other’s past. With the pressure to be re-elected gone, let’s see what’s on the table for the next four years.
– Fiscal cliff (see above)
– Attack the deficit/debt issues
– Immigration reform
– Stimulus package for states to help hire public school teachers
– Massive infrastructure upgrade that will provide jobs to thousands of construction workers
– Plans to consolidate progress on financial regulatory and health care reform (Obamacare)

Romney Disheveled

Windows 8 is here

Today is a big day for Microsoft. A sort of “Do or Die” day. In an effort to stay relevant the former monopoly is releasing its latest version of their Windows series. Windows 8 is Microsoft’s big push into the mobile/tablet world. The strategy: One OS for all the devices. The goal is to have the same OS on the PC, mobile, tablet, Xbox etc…

It’s weird to see Microsoft as the underdog in this race which is being lead by Apple and Google’s Android system, the OS you can find on the Samsung smartphones. I wouldn’t count out RIM’s blackberry either. Yes the former smartphone king is in survival mode but there’s still an increase in users every month and they have some of the most respected premium technology. A new Blackberry is expected in early 2013. MSFT will try to muscle their way in. They have the cash, the resources, the marketing, the technology and the clout to make it happen. The only thing missing are customers. The OS is a hybrid system, it comes with a touch screen and the good old point and click. A Microsoft made tablet, the Surface, is being launched. Steve Ballmer, the CEO, is planning on selling the tablet for $500. He claims that it’s the only tablet on the market that you can work with. A smartphone too in the product line.

Let the war begin!

Here is a video of Steve Ballmer about Windows 8 and the Surface.
Microsoft's New Look: Windows 8

Africa’s investment boom offers valuable lessons (PART XI)

Reposted from The Globe and Mail
By Geoffrey York

Here is the finale of the Africa Next series by Geoffrey York. Here how Geoffrey got the idea for this series:
From a recent chat.

It came from seeing all the hype by investment banks and business executives about “Africa Rising” and the “Africa boom.” We know that the official growth numbers are impressive — 7 of the 10 fastest-growing countries in the world are African — but I wanted to know what it really means for ordinary Africans. Are they benefiting from the boom? Are they getting jobs from the foreign investment in mining and oil? Or is it primarily for the benefit of foreign owners?

PART 1: What is gained and lost as investment outpaces aid
PART 2: Russians building luxury homes in Congo? Get used to it
PART 3: The hotel magnate who used to hide from rebels
PART 4: Weary of handouts, Africans try enterprise
PART 5: The impact of the new land grab
NOW: How the boom can transform Africa

Within sight of the biggest gold mine in Burkina Faso, hundreds of children are slipping silently into starvation.

They live in flimsy wattle or mud huts in a scrub wasteland. They help their parents scrounge for flecks of gold in the sand. And every month, hundreds are so malnourished that they need emergency food at the village clinic – just a short walk from the perimeter of the massive high-tech gold mine, owned by a Canadian company.

I’ve seen the same contrasts and inequities across Africa: poverty and hunger in the shadow of gleaming new mines and plantations; luxury hotel towers rising near crowded slums; villagers gaining jobs from multinational projects while others lose their land; local entrepreneurs capitalizing on the economic growth even as most of the profits go to foreign shareholders.

Land rush leaves Liberia’s farmers in the dust (Part X)

Reposted from The Globe and Mail
By Geoffrey York

PART 1: What is gained and lost as investment outpaces aid
PART 2: Russians building luxury homes in Congo? Get used to it
PART 3: The hotel magnate who used to hide from rebels
PART 4: Weary of handouts, Africans try enterprise
NOW: The impact of the new land grab
PART 6: How the boom can transform Africa

As he walks through the denuded remains of his farm, Kandakai Blasuah points to the marshland where he used to fish. It’s now dry, filled with sand.

The bush where he gathered medicinal herbs is also gone. His farm, too, has vanished. All that’s left are a few rows of corn, and a new road to serve the vast palm plantation that has enveloped his village for the past two years.

“When I was born and opened my eyes, I saw this land,” he says. “I used to have a good life. We had cassava, bananas, plantain, peppers, aloe – but they took it all away.”

From a nearby hilltop, Mr. Blasuah gazes out at the plantation. In every direction, the fields have been stripped of trees and crops. Some are already filled with palm seedlings, planted by Sime Darby, the Malaysian company that took a 63-year lease on the land in 2009.

Africa next: An enterprising hand up, not a handout (Part IV)

Reposted from The Globe and Mail
By Geoffrey York

PART 1: What is gained and lost as investment outpaces aid
PART 2: Russians building luxury homes in Congo? Get used to it
PART 3: The hotel magnate who used to hide from rebels
NOW: Weary of handouts, Africans try enterprise
PART 5: The impact of the new land grab
PART 6: How the boom can transform Africa

In this fourth of a six-part series, Globe and Mail Africa correspondent Geoffrey York investigates how Africa’s growth is changing its future.

Claudio Scotto paces the factory floor and throws his hands to the sky. His machinery is idle, the diesel generator has broken down – and now the repairmen are insisting on cash before they stir themselves.

“I had a moment of hope, but it disappeared very quickly,” he mutters. And then he rushes off to negotiate with the truckers who transport the raw material to his factory. They, too, want a raise.

It’s just another stressful day at Africa Felix Juice, a pioneering enterprise on the outskirts of Sierra Leone’s capital. Its product may seem mundane – barrels of mango and pineapple juice concentrate – but it represents a crucial breakthrough: The company is the first manufacturer to export from Sierra Leone since the end of its long civil war in 2002.

Africa Felix Juice also reveals a new strategy for aid in Africa. Instead of just digging wells or providing medicine, foreign donors are increasingly trying to encourage African business and markets.

“We’re all now doing some soul-searching on what it means to serve the poor,” said Canadian aid worker Richard Schroeder. After 17 years toiling for aid agencies in Asia and elsewhere, Mr. Schroeder is trying a new approach.

He became the president of First Step, a donor-supported profit-making company that created the special industrial zone where the juice factory was born.

The backbone of Africa: Entrepreneurs who refuse to quit (PART III)

Reposted from The Globe and Mail
By Geoffrey York

PART 1: What is gained and lost as investment outpaces aid
PART 2: Russians building luxury homes in Congo? Get used to it
NOW: The hotel magnate who used to hide from rebels
PART 4: Weary of handouts, Africans try enterprise
PART 5: The impact of the new land grab
PART 6: How the boom can transform Africa

In this third of a six-part series, Globe and Mail Africa correspondent Geoffrey York investigates how Africa’s growth is changing its future.

By the age of 33, Wilfred Sam-King had earned and lost a fortune three times over. Each time he built a business from nothing, he saw it looted or torched in a coup or a rebel invasion.

When rebels laid siege to Freetown in 1999, they searched everywhere for Sierra Leone’s famed businessman, aiming to take his money. One day they captured him – but he had disguised himself in shabby clothes, pretending to be his own cook. He made soup for the rebels for three days before escaping.

Refusing to leave his homeland – even after his wife and children found shelter in Canada during the civil war – he patiently rebuilt his fortune again, and today has created a small empire of hotels, retail shops and other businesses worth $20-million.

His determination has made Mr. Sam-King one of Sierra Leone’s most successful entrepreneurs – and living proof of the persistence and imagination that is transforming Africa’s economy.

Africa next: The quest for Africa’s riches (PART II)

Reposted from The Globe and Mail
By Geoffrey York

AFRICA NEXT: A SIX-PART SERIES

PART 1: What is gained and lost as investment outpaces aid
NOW: Russians building luxury homes in Congo? Get used to it
PART 3: The hotel magnate who used to hide from rebels
PART 4: Weary of handouts, Africans try enterprise
PART 5: The impact of the new land grab
PART 6: How the boom can transform Africa

In this second of a six-part series, Globe and Mail Africa correspondent Geoffrey York investigates how Africa’s growth is changing its future.

Driving north in Africa’s copper belt, Mark Crandon marvels at the new factories and offices along the highway. “It’s crazy,” he says. “None of this was here three weeks ago.”

It’s an unlikely place for a foreign investor to be raving about. The Democratic Republic of the Congo is one of the world’s most corrupt, impoverished and war-torn countries. Millions have died in the military and political chaos of recent years. Yet even here, the lure of the Africa boom is proving irresistible.

Africa next: With investment outpacing aid, is this a new golden age for the poorest continent? (PART I)

Here is a six-part series straight from the Globe and Mail. Good research and piece by Geoffrey York.

From The Globe and Mail:
AFRICA NEXT: A SIX-PART SERIES

NOW: What is gained and lost as investment outpaces aid
PART 2: Russians building luxury homes in Congo? Get used to it
PART 3: The hotel magnate who used to hide from rebels
PART 4: Weary of handouts, Africans try enterprise
PART 5: The impact of the new land grab
PART 6: How the boom can transform Africa

In this first of a six-part series, Globe and Mail Africa correspondent Geoffrey York investigates how Africa’s growth is changing its future.

In the dusty streets of the tiny village of Romaro, a building boom is under way. Crumbling mud shacks are being replaced by new tin-roofed houses. Almost overnight, the village’s ancient way of life has vanished. Most of its farmland has been swallowed up by a Swiss multinational, Addax Bioenergy, which has leased more than 14,000 hectares of Sierra Leone for a $330-million sugar-cane plantation to produce ethanol for the European market.

Information Ring – August Back to School Edition

Dear folks,
Thank you so much for the positive comments I have received on the previous emails. Because of the positive feedback I decided to make it better to keep the momentum going. I invite you to read the new edition on my blog at brianlangis.wordpress.com There is more contents, the display is better, more visuals, files, comments and I also post occasionally. Enjoy reading about Zynga, Romney vs Obama, Manchester-United, Usain Bolt, RIM, Glass-Steagall, a couple videos, a hot police chase and more.

Also free to check out emergingfrontiersblog.com
Me and colleagues are tracking down frontier market news at Leopard Capital’s frontier market blog emergingfrontiersblog.com

Twitter: #absolut_brian
Linkedin: http://www.linkedin.com/in/brianlangis

Enjoy!

Zynga a Speculative Value Play?
ZNGA is trading for about $3 with a market cap of 3.9b. This is far from the $10 IPO. The stock has been getting slaughtered because of slower growth forecast. The investment thesis: With about $1.5b in cash or $2 per share, you are buying Zynga on the cheap, almost entirely for its cash. They also own their $233m office in San Francisco. This is the kind of valuation you see in companies in distressed situations but Zynga isn’t burning any cash and that’s important. With only $100m in debt and a current ratio of 2.24x (It means that they can pay their bills for a while) you might be in for a safe bet. The risks: A Facebook crash, shitty games, terrible management, or they start blowing the cash on shitty acquisition. So tell your friends to load up their credit card with virtual potatoes.